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:: Press Releases ::
Tuesday, October 29, 2013

1. Dr. Y.V. Reddy, Chairman, Prof. Abhijit Sen, Ms. Sushama Nath, Dr. M. Govinda Rao and Dr. Sudipto Mundle, Members of the Fourteenth Finance Commission and Sh. A.N. Jha, Secretary visited the State of Gujarat during the period October, 28 - 29, 2013 to hold consultations with the State Government and key stake holders.

2. The Commission met with the Hon’ble Chief Minister, his Cabinet Colleagues and senior officers of the State Government, for discussions.

3. The Chief Minister Gujarat welcomed the Chairman and Members to Gujarat. In his speech he highlighted that the contribution of Gujarat to the national GDP has gone up from 5% in 2000 to 7.32% in 2011 and that any slowing down of high contribution economies such as Gujarat has a larger impact on the national economy. In this context he requested the Commission to first look at the question of relative core competence of the States and the Centre and take a broad and progressive view as regards allocation of central resources to and among States. He stated that Finance Commissions allocations should balance both the objectives of promoting growth and ensuring distributive justice. by incorporating efficiency criteria in every factor that goes into the devolution formula. He emphasized that the conditionalities attendant to the grants should be reduced and the release of the grants which should have pan India relevance must be related to performance and outcomes. In addition FC was requested to look at the challenges of malnutrition, rapid urbanization, enhancing value addition in agriculture, issues relating to migration and the scarcity of water resources facing the State and allocate sufficient funds to the State to address these challenges.

4. The State Government submitted its Memorandum and made a detailed presentation on the finances of the State, its’ projection for the award period and gave its views on the Terms of Reference of the Commission. The State suggested that vertical devolution should be at least 50% of the divisible pool of the central taxes, Cess and Surcharges should be subsumed in the taxes, and Non-Tax Receipts of GOI like proceeds from spectrum auction be shared with states. For horizontal distribution amongst States, it was suggested that 2011 population may be assigned a weight of - 25%, migration load- 5%, area – 10%, fiscal capacity distance – 30%, reduction in fiscal capacity distance – 5%, percentage contribution of GSDP to combined GSDP of all States – 5% and fiscal discipline 20%. The Commission also interacted with representatives of political parties, Panchayati Raj Institutions, Urban Local Bodies, and Trade and Industry Associations.

5. The Commission places on record its appreciation to the Chief Minister and the State Government for the cooperation and support extended to the Commission and assures that the issues raised will receive due attention in the deliberations of the Commission. The Commission also looks forward to continuing interaction with the State Government.

6. The Commission will finalize its recommendations by October 2014 after completing its discussions with all the State Governments, the Government of India and relevant stake holders.

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